In another sign of how deeply fractured and competitive the California grocery-store landscape has become in recent years, with big non-union players like Target and Walmart getting in on a retail food fight of epic proportions, a new era of labor relations is unfolding this week across the Bay Area.

As some big grocers either nail down deals with union workers -- Save Mart -- or at least continue to meet at the bargaining table -- Safeway -- the family-owned Raley's chain is facing striking workers outside its stores as the two sides seem locked in a bitter stalemate over heath care and other issues.

This time, with the pressure on full bore from big-box food sellers and niche players like Trader Joe's, it's not the giant national chains getting jammed up in ugly headline-grabbing labor strife, it's the smaller guys.

Raley's employees closed out their third day of picketing Tuesday. Thousands went on strike Sunday after last-ditch talks broke down, leading to the first grocery walk-off in two years and the first-ever strike in Raley's 77-year history.

The strike caps 15 months of contentious negotiations and signals to some employees that the workplace that had once felt like an extended family has been replaced with a culture of mistrust that pitted worker against manager.

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"I came over here because of the better working conditions and the better attitude toward employees," said Doug Knowles, a butcher at the Pleasanton Raley's who has worked for the company almost seven years. "And all that's gone."

Raley's spokesman John Segale said the company has to lower costs to compete with the 240 or so non-union grocery retailers that have opened in California and Nevada since 2008.

"We've been having to respond to that," he said.

Segale said Raley's wages are still some of the most generous in the industry -- about double what Walmart pays. He said union leaders foiled negotiations by not allowing members to vote on the proposed contract, which management says is more generous than Save Mart's.

"If they had a chance to vote on it, they would support it," he said.

Ron Lind, Local 5 president of the United Food and Commercial Workers and a 30-year veteran of the Northern California grocery scene, said Tuesday that Raley's negotiations are a clear contrast with Safeway, which he says is bargaining in good faith despite labor's battles with the national chain in the past. And the other major grocery player, Save Mart, has already worked out a contract with the UFCW.

Lind said Raley's had gotten "provocative" during negotiations: "They're basically saying, 'Do it our way or not at all,' which is more like what Safeway did in the past."

But in this ever-changing grocery-store landscape, Safeway is no longer the bad guy. Union leaders and Safeway management expect smooth sailing when they meet Wednesday and continue negotiations to replace the contract that expired in October 2011.

"These negotiations have been peaceful and professional, but they have been protracted as labor negotiations tend to be when the issues are very difficult," Keith Turner, Safeway director of public and government affairs, wrote in an email Tuesday.

Small and large established chains are facing growing competition from non-union, low-cost grocers, industry experts say. As big retail chains like Circuit City and Mervyns folded, more grocery operators came into the Northern California market.

"You now have more chains, including Walmart and Target, selling groceries, and whose labor costs are half or less that traditional stores," Lind said.

Walmart has opened a string of Neighborhood Markets and now offers same-day grocery delivery in parts of the Bay Area. The big-box retailer relies on low-wage workers, keeping many to part-time so they don't qualify for benefits, said supermarket industry expert David Livingston. He said that mom-and-pop grocers and local chains may want to continue to offer robust benefit packages and premium pay, "but it's hard and expensive."

Raley's labor strife hasn't escaped the notice of Safeway employees waiting for their new contract. Employees at the Walnut Creek Safeway on Tuesday were a bit anxious about the lengthy negotiations. They had heard about the union's struggles at Raley's, and some employees said they sympathized.

Dee Randle, working the morning shift in the bakery, said employees were ready to strike if they had to.

"If it has to happen to us, we're ready to do it," she said. "You've got to fight for what you believe in."